By the deadline, iron-ore miner Kumba, had applied to convert its 78.6% stake in the Sishen iron mine. But steel manufacturer ArcelorMittal, with the remaining 21.4%, had not. Kumba and an obscure shelf company, Imperial Crown Trading 289 (ICT), raced to acquire the rights to ArcelorMittal’s 21.4% stake, estimated to be worth R800-billion over the mine’s remaining life. But May 1 -- a Friday -- was a public holiday.
On Monday May 4, Kumba and Imperial’s applications for the vacant Sishen stake were recorded on the department’s system in Kimberley. ICT applied for a prospecting right, Kumba for a mining right. Controversy now surrounds both applications.
ICT claims Kumba acted deceitfully by handing in its application early and asking department officials to lodge it on May 4.
Kumba claims that ICT’s application was not ready on May 4, but that officials recorded ICT’s application as lodged on that day -- even though ICT’s application trickled in over succeeding days.
Both companies also accuse one another of bribing officials to tamper with their rival’s application.
In November 2009, the department handed ICT a prospecting right on the basis that both applications had arrived on May 4, but that ICT had superior BEE credentials.
ICT is also well-connected politically: it includes a host of individuals connected to either President Jacob Zuma or his deputy, Kgalema Motlanthe.
In August 2010 Arcelor offered to buy out Imperial and incorporate its directors into a new consortium that included President Jacob Zuma’s son Duduzane and Parekh, making them instant billionaires.
But the buy-out was never consummated. Instead, Kumba and Arcelor won a High Court judgment in December 2011 that mineral rights over a single area are indivisible and that Arcelor’s old order 21.4% stake is fully Kumba’s.
ICT are now out in the cold, although it finalised its appeal against Zondo’s ruling last week. In July 2011, the Hawks raided ICT’s office and the department in Kimberley for evidence of fraud when the applications were made.
ICT has challenged the legality of the raids, and the seized materials are currently out of the Hawks’ reach. – Lionel Faull